/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/240911.mbx T R O U B L E D C O M P A N Y R E P O R T E R E U R O P E Wednesday, September 11, 2024, Vol. 25, No. 183 Headlines F R A N C E ALTICE FRANCE: EUR1BB Bank Debt Trades at 16% Discount POSEIDON BIDCO: EUR1.10BB Bank Debt Trades at 19% Discount G R E E C E ALPHA BANK: Fitch Hikes LongTerm IDR to 'BB', Outlook Positive EUROBANK SA: Fitch Hikes LongTerm IDR to 'BB+', Outlook Positive NATIONAL BANK: Fitch Hikes LongTerm IDR to 'BB+', Outlook Positive PIRAEUS BANK: Fitch Hikes LongTerm IDR to 'BB', Outlook Positive I R E L A N D AVOCA CLO XIX: Moody's Ups Rating on EUR12MM Class F Notes to Ba3 AVOCA CLO XXXI: S&P Assigns B- (sf) Rating to Class F Notes BILBAO CLO I: Moody's Affirms B2 Rating on EUR12MM Class E Notes JAZZ INVESTMENTS I: Fitch Puts 'BB' Rating to Sr. Unsecured Notes K A Z A K H S T A N KAZAKH HOUSEBUILDER: Fitch Assigns BB LongTerm IDR, Outlook Stable S P A I N RURAL HIPOTECARIO VIII: Moody's Ups EUR7.2MM D Notes Rating to Ba1 T U R K E Y TURK EKONOMI: Fitch Publishes 'CCC(EXP)' Rating for Add'l AT1 Notes U N I T E D K I N G D O M ABILITY RECRUITMENT: MHA Named as Administrators AQUALUX PRODUCTS: FRP Advisory Named as Administrators BEIGE PLUS: R2 Advisory to Lead Administration Proceedings DANTECH UK: Begbies Traynor Named as Administrators FILETURN LIMITED: Quantuma Advisory Named as Administrators LISARB ENERGY: Taps Begbies and MacIntyre Hudson as Administrators M PRICE GROUP: Seneca IP to Lead Administration Proceedings ROCKBYSEA SCOTLAND: FRP Advisory Named as Administrators SVL HEALTHCARE: Kroll Advisory Named as Administrators - - - - - =========== F R A N C E =========== ALTICE FRANCE: EUR1BB Bank Debt Trades at 16% Discount ------------------------------------------------------ Participations in a syndicated loan under which Altice France SA is a borrower were trading in the secondary market around 84.2 cents-on-the-dollar during the week ended Friday, Sept. 6, 2024, according to Bloomberg's Evaluated Pricing service data. The EUR1 billion Term loan facility is scheduled to mature on February 2, 2026. About EUR239.5 million of the loan is withdrawn and outstanding. Altice France provides wireless telecommunication services. The Company offers fiber optic network solutions for all type of media. Altice France serves customers in France. POSEIDON BIDCO: EUR1.10BB Bank Debt Trades at 19% Discount ---------------------------------------------------------- Participations in a syndicated loan under which Poseidon Bidco SASU is a borrower were trading in the secondary market around 80.6 cents-on-the-dollar during the week ended Friday, Sept. 6, 2024, according to Bloomberg's Evaluated Pricing service data. The EUR1.10 billion Term loan facility is scheduled to mature on March 1, 2030. The amount is fully drawn and outstanding. Poseidon Bidco provides financial transaction services. The Company's country of domicile is France. =========== G R E E C E =========== ALPHA BANK: Fitch Hikes LongTerm IDR to 'BB', Outlook Positive -------------------------------------------------------------- Fitch Ratings has upgraded Alpha Services and Holdings S.A.'s (HoldCo) and Alpha Bank S.A.'s (Alpha, OpCo) Long-Term Issuer Default Ratings (IDRs) to 'BB' from 'BB-' and Viability Ratings (VRs) to 'bb' from 'bb-'. The Outlooks on the Long-Term IDRs are Positive. The upgrades mainly reflect Fitch's improved assessment of Greece's operating environment (OE) to 'bb+'. Fitch expects the Greek economy to continue to outperform the eurozone average. Paired with falling unemployment and the deployment of the country's Recovery and Resilience Fund, this should support banks' ability to capture profitable business opportunities. The upgrades also reflect continued improvements in Alpha's standalone credit profile, including a further reduction in the stock of problem assets (which include non-performing exposures (NPEs) and net foreclosed assets) and adequate profitability resulting in capital accumulation. The Positive Outlook reflects Fitch's expectation that its OE assessment could further improve if the positive macroeconomic trends continue, and that Alpha's standalone credit profile will continue strengthening. Key Rating Drivers Franchise, Capital Position: The ratings of Alpha and its HoldCo reflect that the group is one of four systemically important banks in Greece. Capitalisation has improved but remains exposed to risks arising from the bank's above-average exposure to problem assets. Alpha's sound deposit-based funding and improved profitability underpin the ratings. Improving OE: Fitch expects business opportunities for Greek banks to benefit from resilient economic growth of over 2% in 2024 and 2025, driven by real-wage increases, falling unemployment and solid investments. This should support banks' business model sustainability, asset quality performance, profitability resilience and internal capital generation. Systemically Important Domestic Bank: Alpha's business model is focused on traditional banking activities in the domestic market, with some diversification in asset management, insurance, Romania and Cyprus. Business model sustainability has benefited from the bank's continuous balance-sheet de-risking and restructuring, although its exposure to legacy problem assets remain above peers. Above-Average NPEs, Weak Coverage: Alpha's NPE ratio (excluding retained senior notes of impaired loan securitisations from total loans) fell to 5.4% at end-June 2024 (end-2023: 7.0%), following further NPE disposals and cures, but remains above its peers' average. Alpha's NPE coverage of 41% at end-June 2024 has strengthened but remains lower than peers. Further Risk Reduction Expected: Fitch expects new NPE inflows to remain manageable and for Alpha to continue reducing its NPE, both organically and through further sales of NPE portfolios. Fitch expects this to drive the NPE ratio (excluding senior notes) towards 4% by end-2026, and for NPE coverage to increase in line with Alpha's strategic plan targets. Peak Profitability to Remain Satisfactory: Alpha's operating profit/risk-weighted assets (RWAs) ratio has benefited significantly from the higher interest rates, disciplined cost management and normalising loan impairment charges. Fitch expects the ratio to remain close to 3% in the medium term on continued cost-saving initiatives, organic growth and supportive asset-quality developments, despite the anticipated decreases in interest rates. Sufficient Capital Buffers, Capital Encumbrance: Alpha's fully loaded common equity Tier 1 (CET1) ratio increased to 14.8% at end-June 2024 on improving earnings, capital management and NPE sales, and Fitch expects it to strengthen towards 17.0% by end-2025. Nonetheless, capitalisation remains exposed to unreserved problem assets, which correspond to about 30% of CET1 capital. The risk from the bank's large exposure to Greek sovereign debt (about 1.8x CET capital) has reduced following the upgrade of the Greek sovereign to an investment-grade rating. Stable Deposit-Based Funding: Alpha's loans/deposits ratio of 76% is higher than at some domestic peers, but is supported by a stable and granular deposit base. Liquidity is also healthy. Access to wholesale markets has improved. The bank has issued both senior and subordinated debt in the past 18 months and is well on track to meets its final minimum requirement for own funds and eligible liabilities (MREL). Despite this, Fitch believes that market access remains less certain than for higher-rated international peers. Holdco and Opco Ratings Equalised: HoldCo is the parent holding company of Alpha, the group's main operating company and core bank. The ratings of the two entities are equalised as Fitch believes that their risk of default is substantially the same, and that fungible liquidity is prudently managed at group level, and expects that double leverage will remain below 120%. Rating Sensitivities Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade A downgrade is unlikely given the Positive Outlook on the Long-Term IDR. The Outlook could be revised to Stable if Greece's economic prospects deteriorate, for example, if an unexpected domestic economic slowdown without prospects of a rebound in the short term leads to less favourable business opportunities for banks. The ratings could be downgraded if its expectations of improvements of the Greek OE do not materialise and there is a material deterioration in the bank's financial metrics, in particular if the problem asset ratio (excluding senior notes) increases towards 10% on a sustained basis, resulting in a material deterioration in capital and earnings. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade An upgrade could derive from an upgrade of Greece's OE score, which could be triggered either by continued positive macroeconomic trends resulting in satisfactory business opportunities for banks or by positive action on Greece's sovereign rating, with the bank maintaining broadly stable financial metrics. An upgrade could also derive from the problem assets ratio (excluding senior notes) reducing towards 4%, a CET1 ratio of at least around 15% on a sustained basis, and the operating profit/RWAs ratio sustainably around 2% without a material deterioration in the bank's risk profile, accompanied by stable funding. OTHER DEBT AND ISSUER RATINGS: KEY RATING DRIVERS DEPOSITS Alpha's long-term deposit rating is one notch above the Long-Term IDR, because of full depositor preference in Greece and its expectation that Alpha will comply with its final MREL, which will be binding from 1 January 2026. Alpha's resolution debt buffer is moderate, but Fitch expects it to grow as the bank issues more senior debt. Deposits will therefore benefit from protection offered by more bank resolution debt and equity, resulting in a lower probability of default. The short-term deposit rating of 'B' is in line with the bank's 'BB+' long-term deposit rating under Fitch's rating correspondence table. GOVERNMENT SUPPORT RATING (GSR) Alpha's GSR of 'no support' reflects Fitch's view that although external extraordinary sovereign support is possible, it cannot be relied on. Senior creditors can no longer expect to receive full extraordinary support from the sovereign in the event that the bank becomes non-viable. The EU's Bank Recovery and Resolution Directive and the Single Resolution Mechanism for eurozone banks provide a framework for resolving banks that requires senior creditors participating in losses ahead of a bank receiving sovereign support. OTHER DEBT AND ISSUER RATINGS: RATING SENSITIVITIES The deposit ratings are sensitive to changes in the bank's IDRs. The ratings could be upgraded if Alpha's resolution debt buffers excluding senior preferred debt issued at the operating company level exceeds 10% of RWAs on a sustained basis, which Fitch deems unlikely. The long-term deposit rating could also be downgraded if Fitch deems Alpha unable to increase the size of its senior and junior debt buffers to comply with its final MREL. An upgrade of the GSR would be contingent on a positive change in the sovereign's propensity to support the bank. In Fitch's view, this is highly unlikely, although not impossible. VR ADJUSTMENTS The operating environment score of 'bb+' is below the 'bbb' implied category score due to the following adjustment reason: level and growth of credit (negative). The asset quality score of 'bb-' is above the 'b & below' implied category score due to the following adjustment reason: historical and future metrics (positive). The earnings & profitability score of 'bb' is above the 'b & below' implied category score due to the following adjustment reason: historical and future metrics (positive). ESG Considerations The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating Prior ----------- ------ ----- Alpha Bank S.A. LT IDR BB Upgrade BB- ST IDR B Affirmed B Viability bb Upgrade bb- Government Support ns Affirmed ns long-term deposits LT BB+ Upgrade BB short-term deposits ST B Affirmed B Alpha Services and Holdings S.A. LT IDR BB Upgrade BB- ST IDR B Affirmed B Viability bb Upgrade bb- Government Support ns Affirmed ns EUROBANK SA: Fitch Hikes LongTerm IDR to 'BB+', Outlook Positive ---------------------------------------------------------------- Fitch Ratings has upgraded Eurobank S.A.'s (Eurobank; OpCo) and Eurobank Ergasias Services and Holdings S.A.'s (HoldCo) Long-Term Issuer Default Ratings (IDRs) to 'BB+' from 'BB', and Viability Ratings (VRs) to 'bb+' from 'bb'. The Outlooks on the Long-Term IDRs are Positive. The upgrades mainly reflect Fitch's improved assessment of Greece's operating environment (OE) to 'bb+'. Fitch expects the Greek economy to continue to outperform the eurozone average. Paired with falling unemployment and the deployment of the country's Recovery and Resilience Fund, this should support banks' ability to capture profitable business opportunities. The upgrades also reflect continued improvements in Eurobank's standalone credit profile, including a further reduction in the stock of problem assets (which include non-performing exposures (NPE) and net foreclosed assets) and healthy profitability, resulting in capital accumulation. The Positive Outlook reflects Fitch's expectation that its OE assessment could further improve if the positive macroeconomic trends continue and result in satisfactory business opportunities for banks. A higher OE score could have a positive impact on its assessment of most of Eurobank's key VR drivers. Key Rating Drivers Adequate Financial Metrics: The ratings of Eurobank and its HoldCo reflect adequate asset quality, capitalisation and profitability. The ratings also reflect a strong domestic market position, international diversification, stable deposit-based funding and adequate access to the institutional debt market. OE Drives Positive Outlook: Fitch expects business opportunities for Greek banks to benefit from resilient economic growth of over 2% in 2024 and 2025, driven by real-wage increases, falling unemployment and solid investments. This should support banks' business model sustainability, asset quality performance, profitability resilience and internal capital generation. Systemic Domestic Bank, International Diversification: Eurobank's business profile is underpinned by its strong franchise in Greece, and business diversification in Bulgaria and Cyprus. It also considers the bank's focus on traditional commercial-banking activities, largely resolved legacy asset quality issues and sustainable profitability prospects. Hellenic Bank Acquisition: The recent acquisition of a majority stake in Cyprus's second-largest bank Hellenic Bank Public Company Limited (HB, BBB-/Stable) is consistent with Eurobank's strategy to grow its international activities. HB's full consolidation (starting from 1 July 2024) will marginally improve the group's financial metrics except for a manageable capital erosion. Fitch believes that the acquisition has some execution risks, but could also deliver some cost and revenue synergies if adequately executed. Manageable NPE Ratio, High Coverage: Eurobank's NPE ratio of 3.4% at end-June 2024 (excluding retained senior notes of own NPE securitisations from total loans) is the lowest in over a decade and better than the domestic average, but still moderate by international standards. High impaired loan coverage of 89% mitigates asset quality risks. Exposure to foreclosed assets is manageable and slowly decreasing. Peak Profitability to Remain Satisfactory: Eurobank's annualised operating profit/risk-weighted assets (RWAs) of 4% in 1H24 has likely reached its peak. As interest rates fall, Fitch expects the ratio to moderate but remain comfortably above 2.5%, supported by fee income growth, cost control and sustainable loan impairment charges. Eurobank's profitability remains sensitive to the interest-rate and credit cycles, but benefits from international diversification. Adequate Capital Buffers, Sovereign Exposure: Eurobank's common equity Tier 1 (CET1) ratio of 16.2% at end-June 2024 (pro-forma for HB's acquisition, dividends, ongoing NPE transactions and a synthetic securitisation) had adequate buffers over regulatory requirements. Eurobank's capital remains exposed to Greek sovereign risk from investments in government bonds and deferred tax credits. Deposit-Based Funding, Market Access: Eurobank's deposits are stable and granular, and comfortably exceed loans. Eurobank access to the wholesale institutional debt market has improved and become more frequent over the past two years, and the bank is on track to comply with its final minimum requirement for own funds and eligible liabilities (MREL). However, Fitch believes that market access remains less certain than for higher-rated international peers. Holdco and OpCo Ratings Equalised: HoldCo is the parent holding company of Eurobank, the group's main operating company. The ratings of the two entities are equalised as Fitch believes that their risk of default is substantially the same, and expects that double leverage will remain below 120%, and that fungible liquidity will be prudently managed at group level. Rating Sensitivities Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade A downgrade is unlikely given the Positive Outlook on the Long-Term IDRs. The Outlook could be revised to Stable if Greece's economic prospects deteriorate, for example, if an unexpected domestic economic slowdown without prospects of a rebound in the short term leads to less favourable business opportunities for banks. The ratings could be downgraded if its expectations of improvements of the Greek OE do not materialise and there is a material deterioration in the bank's financial metrics, in particular if the NPE ratio (excluding senior notes) increases above 6% on a sustained basis, resulting in a material deterioration in capital and earnings. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade An upgrade would be contingent on an upgrade of Greece's OE score, which could be triggered either by continued positive macroeconomic trends resulting in satisfactory business opportunities for banks or by a positive rating action on Greece's sovereign rating. An upgrade would also require the NPE ratio (excluding senior notes) to remain below 4% and the CET1 ratio to remain at least around 15% on a sustained basis. An upgrade would also require an operating profit/RWAs ratio sustainably around 2% without a material deterioration in the bank's risk profile, accompanied by stable funding. OTHER DEBT AND ISSUER RATINGS: KEY RATING DRIVERS DEPOSITS Eurobank's long-term deposit rating is one notch above its Long-Term IDR because of full depositor preference in Greece and its expectation that Eurobank will comply with its final MREL, which will be binding from 1 January 2026. Fitch expects Eurobank's moderate resolution debt buffer to grow as the bank issues more senior debt. Deposits will therefore benefit from protection offered by more bank resolution debt and equity, resulting in a lower probability of default. The short-term deposit rating of 'F3' is in line with the bank's 'BBB-' long-term deposit rating under Fitch's rating correspondence table. SENIOR PREFERRED DEBT Eurobank's long-term senior preferred debt is rated in line with the bank's Long-Term IDR, reflecting its view that the probability of default on senior preferred obligations is the same as that of the bank, as expressed by the IDR, and their average recovery prospects. This is based on its expectation that Eurobank's resolution buffers will comprise senior preferred and more junior debt instruments, as well as equity. The rating also reflects its expectation that the combined buffer of additional Tier 1, Tier 2 and senior non-preferred debt is unlikely to exceed 10% of the bank's RWAs on a sustained basis. Eurobank's short-term senior preferred debt rating of 'B' is aligned with its Short-Term IDR. SUBORDINATED DEBT The rating of HoldCo's subordinated debt is two notches lower than its VR to reflect poor recovery prospects in a default given its junior ranking. No notching is applied for incremental non-performance risk. GOVERNMENT SUPPORT RATING (GSR) Eurobank's GSR of 'no support' (ns) reflects Fitch's view that although extraordinary sovereign support is possible, it cannot be relied on. Senior creditors can no longer expect to receive full extraordinary support from the sovereign in the event that the bank becomes non-viable. The EU's Bank Recovery and Resolution Directive and the Single Resolution Mechanism for eurozone banks provide a framework for resolving banks that requires senior creditors participating in losses ahead of a bank receiving sovereign support. OTHER DEBT AND ISSUER RATINGS: RATING SENSITIVITIES The long-term deposit and senior preferred debt ratings are primarily sensitive to changes in the bank's Long-Term IDR, from which they are notched. The long-term deposit and senior preferred debt ratings could be upgraded if Eurobank's resolution debt buffer excluding senior preferred debt issued at the operating company level exceeds 10% RWAs on a sustained basis, which Fitch deems unlikely. The long-term deposit rating could be downgraded if Fitch deems Eurobank is unable to increase the size of its senior and junior debt buffers to comply with its final MREL. The rating of HoldCo's subordinated debt is sensitive to changes in its VR, which in turn is sensitive to changes in Eurobank's VR. An upgrade of the GSR would be contingent on a positive change in the sovereign's propensity to support the bank. In Fitch's view, this is highly unlikely, although not impossible. VR ADJUSTMENTS The operating environment score of 'bb+' is below the 'bbb' implied category score, due to the following adjustment reason: level and growth of credit (negative). The asset quality score of 'bb' is above the 'b & below' implied category score due to the following adjustment reason: historical and future metrics (positive). ESG Considerations The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating Prior ----------- ------ ----- Eurobank S.A. LT IDR BB+ Upgrade BB ST IDR B Affirmed B Viability bb+ Upgrade bb Government Support ns Affirmed ns long-term deposits LT BBB- Upgrade BB+ Senior preferred LT BB+ Upgrade BB Senior preferred ST B Affirmed B short-term deposits ST F3 Upgrade B Eurobank Ergasias Services and Holdings S.A. LT IDR BB+ Upgrade BB ST IDR B Affirmed B Viability bb+ Upgrade bb Government Support ns Affirmed ns subordinated LT BB- Upgrade B+ NATIONAL BANK: Fitch Hikes LongTerm IDR to 'BB+', Outlook Positive ------------------------------------------------------------------ Fitch Ratings has upgraded National Bank of Greece S.A.'s (NBG) Long-Term Issuer Default Rating (IDR) to 'BB+' from 'BB'. The Outlook is Positive. The upgrade mainly reflects Fitch's improved assessment of Greece's operating environment (OE) to 'bb+'. Fitch expects the Greek economy to continue to outperform the eurozone average. Paired with falling unemployment and the deployment of the country's Recovery and Resilience Fund, this should support banks' ability to capture profitable business opportunities. The upgrade also reflects continued improvements in NBG's standalone credit profile, including a further reduction in the stock of problem assets (which include nonperforming exposures (NPEs) and net foreclosed assets) and healthy profitability resulting in capital accumulation. The Positive Outlook reflects Fitch's expectation that its OE assessment could improve further if the positive macroeconomic trends continue and result in satisfactory business opportunities for banks. A higher OE score could have a positive impact on its assessment of most of NBG's key VR drivers. Key Rating Drivers Franchise, Capital Underpin Ratings: NBG's ratings reflect its strong position within the Greek domestic market, which supports its business and profitability prospects, stable deposit-based funding and sound liquidity. The ratings also reflect above-sector average capital ratios and low capital encumbrance from unreserved problem assets. OE Drives Positive Outlook: Fitch expects business opportunities for Greek banks to benefit from resilient economic growth of over 2% in 2024 and 2025, driven by real-wage increases, falling unemployment and solid investments. This should support banks' business model sustainability, asset quality performance, profitability resilience and internal capital generation. Systemic Domestic Bank: NBG is one of four systemically important banks in Greece, where it has strong market shares in retail and commercial banking. Its assessment also considers the bank's focus on traditional commercial-banking activities, largely resolved legacy asset quality issues and sustainable profitability prospects. Moderate NPE Ratio; Adequate Coverage: NBG's NPE ratio (end-June 2024: 3.7%; excluding retained senior notes of impaired loan securitisations from total loans) has materially decreased and is the lowest among domestic peers, but is moderate by international standards. Its assessment also considers NBG's high NPE reserve coverage of 83% and small stock of foreclosed assets. Satisfactory, Sustainable Profitability: NBG's profitability has stabilised in line with its progress with restructuring and deleveraging of legacy problem assets. The bank's operating profit/RWAs ratio was high at 4.7% in 1H24 (2023: 4.0%), and Fitch expects it to remain healthy over the medium term, despite declining interest rates supported by fee-income growth, ongoing loan expansion, tight cost management and a continuing reduction of loan impairments. The contribution from net fee income is gradually improving, but still only makes up a modest share of the bank's revenues. Comfortable Capital Buffers: NBG's common equity Tier 1 (CET1) ratio of 18.3% at end-June 2024 was the highest among domestic peers and had ample buffers over regulatory requirements. Fitch expects NBG's capital buffers to remain sound in the medium term, supported by structurally improved profitability. This should more than offset RWA growth from increased lending and dividend distributions. Its assessment also reflects that capital encumbrance to unreserved problem assets is small, although capital remains exposed to Greek sovereign risk, from investments in government bonds and deferred tax credits, although the latter are decreasing. Deposit-Based Funding; Sound Liquidity: NBG's loans/deposits ratio is strong and stable at around 60%, benefiting from a highly granular deposit base. Liquidity buffers are healthy. NBG is on track to meet its minimum requirement for own funds and eligible liabilities (MREL) needs following several wholesale debt issuances. The bank has recently issued both Tier 2 subordinated notes and MREL eligible senior preferred notes during 1H24, which demonstrates the bank's access to capital markets. Rating Sensitivities Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade A downgrade is unlikely given the Positive Outlook on the Long-Term IDR. The Outlook could be revised to Stable if Greece's economic prospects deteriorate, for example, if an unexpected domestic economic slowdown without prospects of a rebound in the short term leads to less favourable business opportunities for banks. The ratings could be downgraded if its expectations of improvements of the Greek operating environment do not materialise and there is a material deterioration in the bank's financial metrics, in particular if the NPE ratio (excluding senior notes) increases above 6% on a sustained basis, resulting in a material deterioration in capital and earnings. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade An upgrade would be contingent on an upgrade of Greece's OE score, which could be triggered either by continued positive macroeconomic trends resulting in satisfactory business opportunities for banks or by positive action on Greece's sovereign rating. An upgrade would also require the NPE ratio (excluding senior notes) to remain below 4% and the CET1 ratio to remain at least around 15% on a sustained basis. An upgrade would also require an operating profit/RWAs ratio sustainably around 2% without a material deterioration in the bank's risk profile, accompanied by stable funding. OTHER DEBT AND ISSUER RATINGS: KEY RATING DRIVERS DEPOSITS NBG's long-term deposit rating is one notch above its Long-Term IDR, because of full depositor preference in Greece and its expectation that NBG will comply with its final MREL, which will be binding from 1 January 2026. Deposits will therefore benefit from protection offered by more bank resolution debt and equity, resulting in a lower probability of default. The short-term deposit rating of 'F3' is in line with the bank's 'BBB-' long-term deposit rating under Fitch's rating criteria. SENIOR PREFERRED DEBT The senior preferred debt rating is in line with NBG's Long-Term IDR, reflecting its view that the default risk of senior preferred obligations is equivalent to that of the bank as expressed by the IDR, and their average recovery prospects. This is based on its expectation that NBG's resolution buffers under the MREL regime will comprise senior preferred and more junior debt instruments, as well as equity. The rating also reflects its expectation that the combined buffer of additional Tier 1, Tier 2 and senior non-preferred debt is unlikely to exceed 10% of RWAs on a sustained basis. NBG's short-term senior preferred debt rating of 'B' is aligned with its Short-Term IDR. GOVERNMENT SUPPORT RATING (GSR) NBG's Government Support Rating of 'no support' (ns) reflects Fitch's view that although extraordinary sovereign support is possible, it cannot be relied on. Senior creditors can no longer expect to receive full extraordinary support from the sovereign in the event that the bank becomes non-viable. The EU's Bank Recovery and Resolution Directive and the Single Resolution Mechanism for eurozone banks provide a framework for resolving banks that requires senior creditors participating in losses ahead of a bank receiving sovereign support. OTHER DEBT AND ISSUER RATINGS: RATING SENSITIVITIES The long-term deposit and senior preferred debt ratings are primarily sensitive to changes in the bank's Long-Term IDR, from which they are notched. The long-term deposit and senior preferred debt ratings could be upgraded if NBG's resolution debt buffer excluding senior preferred debt issued at the operating company level exceeds 10% of RWAs on a sustained basis, which Fitch deems unlikely. An upgrade of the GSR would be contingent on a positive change in the sovereign's propensity to support the bank. In Fitch's view, this is highly unlikely, although not impossible. VR ADJUSTMENTS The operating environment score of 'bb+' is below the 'bbb' implied category score due to the following adjustment reason: level and growth of credit (negative). The asset quality score of 'bb' is above the 'b & below' implied category score due to the following adjustment reason: historical and future metrics (positive). ESG Considerations The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating Prior ----------- ------ ----- National Bank of Greece S.A. LT IDR BB+ Upgrade BB ST IDR B Affirmed B Viability bb+ Upgrade bb Government Support ns Affirmed ns long-term deposits LT BBB- Upgrade BB+ Senior preferred LT BB+ Upgrade BB Senior preferred ST B Affirmed B short-term deposits ST F3 Upgrade B PIRAEUS BANK: Fitch Hikes LongTerm IDR to 'BB', Outlook Positive ---------------------------------------------------------------- Fitch Ratings has upgraded Piraeus Financial Holdings S.A.'s (HoldCo) and Piraeus Bank S.A.'s (Piraeus) Long-Term Issuer Default Ratings (IDRs) to 'BB' from 'BB-'. The Outlook is Positive. The upgrades mainly reflect Fitch's improved assessment of Greece's operating environment (OE) to 'bb+'. Fitch expects the Greek economy to continue to outperform the eurozone average. Paired with falling unemployment and the deployment of the country's Recovery and Resilience Fund, this should support banks' ability to capture profitable business opportunities. The upgrades also reflect continued improvements in Piraeus's standalone credit profile, including a further reduction in the stock of problem assets (which include non-performing exposures (NPE) and net foreclosed assets) and materially improved profitability, resulting in capital accumulation. The Positive Outlook reflects Fitch's expectation that its OE assessment could further improve if the positive macroeconomic trends continue, and that Piraeus's standalone credit profile will continue strengthening. Key Rating Drivers Improved Capital and Earnings: The ratings of HoldCo and Piraeus reflect structurally improved profitability on higher rates and successful restructuring, adequate capital buffers and a strong market position in Greece. Asset-quality metrics are now closer to peers after the bank's asset-quality clean-up, although remains relatively high by international standards. Sound profitability and stable and large deposit-based funding are rating strengths. OE Underpins Positive Outlook: Fitch expects business opportunities for Greek banks to benefit from resilient economic growth of over 2% in 2024 and 2025, driven by real-wage increases, falling unemployment and solid investments. In turn, this should support banks' business model sustainability, asset quality performance, profitability resilience and internal capital generation. Leading Domestic Bank, Positive Execution: Piraeus's business profile is underpinned by its leading domestic franchise, which remains weighted towards traditional commercial banking activities. The bank's long-term business model sustainability has improved in line with its successful de-risking and restructuring, including cost cutting and increased digitisation. Low NPEs, Material Foreclosed Assets: The bank's NPE ratio (excluding retained senior notes of impaired loan securitisations from total loans) of 3.9% at end-June 2024 has been reduced significantly due to securitisations, modest new inflows, write-offs and adequate recoveries and cures. However, the problem assets ratio remains high at 7.5% due to the bank's still sizeable foreclosed assets. Fitch expects the problem asset ratio to reduce to mid-single digits by end-2025 reflecting reduced affordability pressures, loan growth, additional recoveries and continued sales of foreclosed assets. Its assessment also reflects its expectation of good performance of legacy state guaranteed loans and an increase of the loan loss coverage of impaired loans (end-June 2024: 59%). Improved Profitability: Profit has strongly recovered since 2021, driven by materially higher net interest income on higher rates and structurally lower operating expenses and loan impairment charges following the bank's restructuring and asset-quality clean-up. Non-interest income is growing but remains moderate by European standards. Operating profit increased to 4.6% of risk-weighted assets (RWAs) in 1H24 (2023: 3.3%), which compares well with the domestic sector. Fitch expects this ratio to remain sound in 2024-2026 despite falling interest rates, due to lower credit losses, strong operating efficiency and continued loan and fee-income growth. Adequate Capital Buffers, Reduced Encumbrance: Piraeus's common equity Tier 1 (CET1; end-June 2024: 13.9%) represents adequate buffers over the regulatory requirements but is still lower than domestic peers. Fitch expects the CET1 ratio to trend towards 15% in 2025-2026 as improved earnings generation will more than offset the impacts of loan growth, a gradual increase in capital distributions and upcoming capital regulations. Its assessment also reflects a materially reduced exposition to unreserved problem assets (end-June 2024: 38% of CET1 capital), although the capital remains exposed to Greek sovereign risk, from investments in government bonds and deferred tax credits. Deposit-Based Funding: The bank's stable and granular deposit base benefits from large domestic market shares in retail banking. Market access is less certain than for higher-rated international peers, but has materially improved over the past years. Piraeus has repeatedly tapped the unsecured debt markets and already meets its minimum requirement for own funds and eligible liabilities (MREL) set by end-2025. Its assessment also reflects the bank's good liquidity position and comfortable maturity profile. Holdco and Opco Ratings Equalised: The HoldCo is the parent holding company of Piraeus, the group's main operating company and core bank. The ratings of the two entities are equalised as Fitch believes their risk of default is substantially the same, fungible liquidity is prudently managed at group level and expects that double leverage will remain below 120%. Rating Sensitivities Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade A downgrade is unlikely given the Positive Outlook on the Long-Term IDR. The Outlook could be revised to Stable if Greece's economic prospects deteriorate, for example, if an unexpected domestic economic slowdown without prospects of a rebound in the short term leads to less favourable business opportunities for banks. The ratings could be downgraded if its expectations of improvements of the Greek OE do not materialise and there is a material deterioration in the bank's financial metrics, in particular if the problem asset ratio (excluding senior notes) increases towards 10% on a sustained basis, resulting in a material deterioration in capital and earnings. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade An upgrade could derive from an upgrade of Greece's operating environment score, which could be triggered either by continued positive macroeconomic trends resulting in satisfactory business opportunities for banks or by positive rating action on Greece's sovereign rating, with the bank maintaining broadly stable financial metrics. An upgrade could also derive from the problem assets ratio (excluding senior notes) reducing towards 4%, a CET1 ratio of at least around 15% on a sustained basis, and the operating profit/RWAs ratio sustainably around 2% without a material deterioration in the bank's risk profile, accompanied by stable funding. OTHER DEBT AND ISSUER RATINGS: KEY RATING DRIVERS DEPOSITS Piraeus's long-term deposit rating is one notch above its Long-Term IDR because of full depositor preference in Greece and the fact that Piraeus already complies with its final MREL, which will be binding from 1 January 2026. Deposits therefore benefit from protection offered by more bank resolution debt and equity, resulting in a lower probability of default. The short-term deposit rating of 'B' is in line with the bank's 'BB+' long-term deposit rating under Fitch's rating correspondence table. SENIOR PREFERRED DEBT Piraeus's long-term senior preferred debt is rated in line with its Long-Term IDR, reflecting its view that the probability of default on senior preferred obligations is the same as that of the bank, as expressed by the IDR, and their average recovery prospects. This is based on its expectation that Piraeus's resolution buffers will comprise both senior preferred and more junior debt instruments, as well as equity. The rating also reflects its expectation that the combined buffer of additional Tier 1, Tier 2 and senior non-preferred debt is unlikely to exceed 10% of the bank's RWAs on a sustained basis. Piraeus's short-term senior preferred debt rating of 'B' is aligned with its Short-Term IDR. SUBORDINATED DEBT The rating of the HoldCo's subordinated Tier 2 debt is two notches below its Viability Rating (VR) to reflect poor recovery prospects in a default given its junior ranking. No notching is applied for incremental non-performance risk. GOVERNMENT SUPPORT RATING (GSR) Piraeus's 'no support' GSR reflects Fitch's view that although extraordinary sovereign support is possible it cannot be relied on. Senior creditors can no longer expect to receive full extraordinary support from the sovereign in the event that the bank becomes non-viable. The EU's Bank Recovery and Resolution Directive and the Single Resolution Mechanism for eurozone banks provide a framework for resolving banks that requires senior creditors participating in losses ahead of a bank receiving sovereign support. OTHER DEBT AND ISSUER RATINGS: RATING SENSITIVITIES The long-term deposit and senior preferred debt ratings are primarily sensitive to changes in the bank's Long-Term IDR, from which they are notched. The long-term deposit and senior preferred debt ratings could be upgraded if Piraeus's resolution debt buffer excluding senior preferred debt issued at the operating company level exceeds 10% of RWAs on a sustained basis, which Fitch deems unlikely. The rating of the HoldCo's subordinated Tier 2 debt is primarily sensitive to changes in the HoldCo's Viability Rating, from which it is notched. An upgrade of the GSR would be contingent on a positive change in the sovereign's propensity to support the bank. In Fitch's view, this is highly unlikely, although not impossible. VR ADJUSTMENTS The operating environment score of 'bb+' is below the 'bbb' implied category score, due to the following adjustment reason: level and growth of credit (negative). The asset quality score of 'bb-' is above the 'b & below' implied category score, due to the following adjustment reason: historical and future metrics (positive). The earnings & profitability score of 'bb+' is above the 'b & below' implied category score, due to the following adjustment reason: historical and future metrics (positive). ESG Considerations The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating Prior ----------- ------ ----- Piraeus Bank S.A. LT IDR BB Upgrade BB- ST IDR B Affirmed B Viability bb Upgrade bb- Government Support ns Affirmed ns long-term deposits LT BB+ Upgrade BB Senior preferred LT BB Upgrade BB- short-term deposits ST B Affirmed B Senior preferred ST B Affirmed B Piraeus Financial Holdings S.A. LT IDR BB Upgrade BB- ST IDR B Affirmed B Viability bb Upgrade bb- Government Support ns Affirmed ns Subordinated LT B+ Upgrade B ============= I R E L A N D ============= AVOCA CLO XIX: Moody's Ups Rating on EUR12MM Class F Notes to Ba3 ----------------------------------------------------------------- Moody's Ratings has upgraded the ratings on the following notes issued by Avoca CLO XIX Designated Activity Company: EUR28,000,000 Class C Deferrable Mezzanine Floating Rate Notes due 2031, Upgraded to Aaa (sf); previously on Nov 23, 2023 Upgraded to Aa3 (sf) EUR24,250,000 Class D Deferrable Mezzanine Floating Rate Notes due 2031, Upgraded to A1 (sf); previously on Nov 23, 2023 Upgraded to Baa1 (sf) EUR21,250,000 Class E Deferrable Junior Floating Rate Notes due 2031, Upgraded to Ba1 (sf); previously on Nov 23, 2023 Affirmed Ba2 (sf) EUR12,000,000 Class F Deferrable Junior Floating Rate Notes due 2031, Upgraded to Ba3 (sf); previously on Nov 23, 2023 Upgraded to B1 (sf) Moody's have also affirmed the ratings on the following notes: EUR242,000,000 (current outstanding amount EUR113,501,689.49) Class A-1 Senior Secured Floating Rate Notes due 2031, Affirmed Aaa (sf); previously on Nov 23, 2023 Affirmed Aaa (sf) EUR10,000,000 Class A-2 Senior Secured Floating Rate Notes due 2031, Affirmed Aaa (sf); previously on Nov 23, 2023 Affirmed Aaa (sf) EUR14,500,000 Class B-1 Senior Secured Floating Rate Notes due 2031, Affirmed Aaa (sf); previously on Nov 23, 2023 Affirmed Aaa (sf) EUR20,000,000 Class B-2 Senior Secured Fixed Rate Notes due 2031, Affirmed Aaa (sf); previously on Nov 23, 2023 Affirmed Aaa (sf) Avoca CLO XIX Designated Activity Company, issued in November 2018 is a collateralised loan obligation (CLO) backed by a portfolio of mostly high-yield senior secured European loans. The portfolio is managed by KKR Credit Advisors (Ireland) Unlimited Company. The transaction's reinvestment period ended in April 2023. RATINGS RATIONALE The rating upgrades on the Class C, Class D, Class E and Class F notes are primarily a result of the deleveraging of the Class A-1 notes following amortisation of the underlying portfolio since the last rating action in November 2023. The affirmations on the ratings on the Class A-1, Class A-2, Class B-1 and Class B-2 notes are primarily a result of the expected losses on the notes remaining consistent with their current rating levels, after taking into account the CLO's latest portfolio, its relevant structural features and its actual over-collateralisation ratios. The Class A-1 notes have paid down by approximately EUR102.0 million (42.1% of original balance) since the last rating action in November 2023 and EUR128.5 million (53.1% of original balance) since closing. As a result of the deleveraging, over-collateralisation (OC) has increased across the capital structure. According to the trustee report dated July 2024 [1] the Class A/B, Class C, Class D, Class E and Class F OC ratios are reported at 172.50%, 146.50%, 129.60%, 117.70% and 111.90% compared to October 2023 [2] levels of 144.10%, 130.10%, 120.00%, 112.30% and 108.40% respectively. The deleveraging and OC improvements primarily resulted from high prepayment rates of leveraged loans in the underlying portfolio. Most of the prepaid proceeds have been applied to amortise the liabilities. All else held equal, such deleveraging is generally a positive credit driver for the CLO's rated liabilities. The key model inputs Moody's use in Moody's analysis, such as par, weighted average rating factor, diversity score and the weighted average recovery rate, are based on its published methodology and could differ from the trustee's reported numbers. In its base case, Moody's used the following assumptions: Performing par and principal proceeds balance: EUR272.5m Defaulted Securities: none Diversity Score: 50 Weighted Average Rating Factor (WARF): 3052 Weighted Average Life (WAL): 3.53 years Weighted Average Spread (WAS) (before accounting for Euribor floors): 3.80% Weighted Average Coupon (WAC): 4.19% Weighted Average Recovery Rate (WARR): 44.64% The default probability derives from the credit quality of the collateral pool and Moody's expectation of the remaining life of the collateral pool. The estimated average recovery rate on future defaults is based primarily on the seniority of the assets in the collateral pool. In each case, historical and market performance and a collateral manager's latitude to trade collateral are also relevant factors. Moody's incorporate these default and recovery characteristics of the collateral pool into its cash flow model analysis, subjecting them to stresses as a function of the target rating of each CLO liability it is analysing. Methodology Underlying the Rating Action: The principal methodology used in these ratings was "Moody's Global Approach to Rating Collateralized Loan Obligations" published in May 2024. Counterparty Exposure: The rating action took into consideration the notes' exposure to relevant counterparties, such as account bank, using the methodology "Moody's Approach to Assessing Counterparty Risks in Structured Finance methodology" published in October 2023. Moody's concluded the ratings of the notes are not constrained by these risks. Factors that would lead to an upgrade or downgrade of the ratings: The rated notes' performance is subject to uncertainty. The notes' performance is sensitive to the performance of the underlying portfolio, which in turn depends on economic and credit conditions that may change. The collateral manager's investment decisions and management of the transaction will also affect the notes' performance. Additional uncertainty about performance is due to the following: -- Portfolio amortisation: The main source of uncertainty in this transaction is the pace of amortisation of the underlying portfolio, which can vary significantly depending on market conditions and have a significant impact on the notes' ratings. Amortisation could accelerate as a consequence of high loan prepayment levels or collateral sales by the collateral manager or be delayed by an increase in loan amend-and-extend restructurings. Fast amortisation would usually benefit the ratings of the notes beginning with the notes having the highest prepayment priority. In addition to the quantitative factors that Moody's explicitly modelled, qualitative factors are part of the rating committee's considerations. These qualitative factors include the structural protections in the transaction, its recent performance given the market environment, the legal environment, specific documentation features, the collateral manager's track record and the potential for selection bias in the portfolio. All information available to rating committees, including macroeconomic forecasts, input from Moody's other analytical groups, market factors, and judgments regarding the nature and severity of credit stress on the transactions, can influence the final rating decision. AVOCA CLO XXXI: S&P Assigns B- (sf) Rating to Class F Notes ----------------------------------------------------------- S&P Global Ratings assigned ratings to Avoca CLO XXXI DAC's class A-1, A-2, B-1, B-2, C, D, E, and F notes. At closing, the issuer also issued unrated subordinated notes. The ratings assigned to Avoca CLO XXXI's notes reflect our assessment of: -- The diversified collateral pool, which primarily comprises broadly syndicated speculative-grade senior secured term loans and bonds that are governed by collateral quality tests. -- The credit enhancement provided through the subordination of cash flows, excess spread, and overcollateralization. -- The collateral manager's experienced team, which can affect the performance of the rated notes through collateral selection, ongoing portfolio management, and trading. -- The transaction's legal structure, which is bankruptcy remote. -- The transaction's counterparty risks, which is in line with S&P's counterparty rating framework. Portfolio benchmarks CURRENT S&P weighted-average rating factor 2,825.71 Default rate dispersion 438.97 Weighted-average life (years) 4.69 Weighted-average life (years) extended to cover the length of the reinvestment period 4.69 Obligor diversity measure 172.34 Industry diversity measure 21.04 Regional diversity measure 1.23 Transaction key metrics CURRENT Portfolio weighted-average rating derived from S&P's CDO evaluator B 'CCC' category rated assets (%) 1.01 Actual 'AAA' weighted-average recovery (%) 36.94% Actual weighted-average spread (net of floors; %) 4.00 Actual weighted-average coupon (%) 4.43 Under the transaction documents, the rated notes will pay quarterly interest unless a frequency switch event occurs. Following this, the notes will switch to semiannual payments. Asset priming obligations and uptier priming debt The issuer can purchase asset priming (drop down) obligations and/or uptier priming debt to address the risk of a distressed obligor either moving collateral outside the existing creditors' covenant group or incurring new money debt senior to the existing creditors. Rationale The portfolio is well-diversified, primarily comprising broadly syndicated speculative-grade senior secured term loans and senior secured bonds. Therefore, S&P has conducted its credit and cash flow analysis by applying its criteria for corporate cash flow CDOs. S&P said, "In our cash flow analysis, we used the EUR400 million target par amount, the covenanted weighted-average spread (3.85%), the covenanted weighted-average coupon (4.50%), and the actual identified weighted-average recovery rates calculated in line with our CLO criteria for all classes of notes. We applied various cash flow stress scenarios, using four different default patterns, in conjunction with different interest rate stress scenarios for each liability rating category. "Until the end of the reinvestment period on April 15, 2029, the collateral manager may substitute assets in the portfolio as long as our CDO Monitor test is maintained or improved in relation to the initial ratings on the notes. This test looks at the total amount of losses that the transaction can sustain--as established by the initial cash flows for each rating--and compares that with the current portfolio's default potential plus par losses to date. As a result, until the end of the reinvestment period, the collateral manager may through trading deteriorate the transaction's current risk profile, if the initial ratings are maintained. "Under our structured finance sovereign risk criteria, we consider the transaction's exposure to country risk sufficiently mitigated at the assigned ratings. "The transaction's documented counterparty replacement and remedy mechanisms adequately mitigate its exposure to counterparty risk under our counterparty criteria, and the legal structure and framework to be bankruptcy remote, in line with our legal criteria. "The CLO will be managed by KKR Credit Advisors (Ireland) Unlimited Co., and the maximum potential rating on the liabilities is 'AAA' under our operational risk criteria. "Following our analysis of the credit, cash flow, counterparty, operational, and legal risks, we believe the ratings are commensurate with the available credit enhancement for the class A-1 and A-2 notes. Our credit and cash flow analysis indicates that the available credit enhancement for the class B-1 to F notes could withstand stresses commensurate with higher ratings than those assigned. However, as the CLO will be in its reinvestment phase starting from closing--during which the transaction's credit risk profile could deteriorate--we have capped our ratings on the notes. "Given our analysis of the credit, cash flow, counterparty, operational, and legal risks, we believe our ratings are commensurate with the available credit enhancement for all the rated classes of debt. "In addition to our standard analysis, to indicate how rising pressures among speculative-grade corporates could affect our ratings on European CLO transactions, we also included the sensitivity of the ratings on the class A-1 to E notes based on four hypothetical scenarios. "As our ratings analysis makes additional considerations before assigning ratings in the 'CCC' category, and we would assign a 'B-' rating if the criteria for assigning a 'CCC' category rating are not met, we have not included the above scenario analysis results for the class F notes." Environmental, social, and governance S&P said, "We regard the transaction's exposure to environmental, social, and governance (ESG) credit factors as broadly in line with our benchmark for the sector. Primarily due to the diversity of the assets within CLOs, the exposure to environmental and social credit factors is viewed as below average, while governance credit factors are average. The transaction documents prohibit assets from being related to the following industries: anti-personnel mines, cluster weapons, depleted uranium, nuclear weapons, white phosphorus, biological or chemical weapons; civilian firearms; tobacco; thermal coal or coal extraction; payday lending; thermal coal production, speculative extraction of oil and gas, oil sands and associated pipelines industry; endangered or protected wildlife; marijuana; pornography or prostitution; opioid; and illegal drugs or narcotics. Accordingly, since the exclusion of assets from these industries does not result in material differences between the transaction and our ESG benchmark for the sector, no specific adjustments have been made in our rating analysis to account for any ESG-related risks or opportunities." Ratings list AMOUNT CLASS RATING* (MIL. EUR) INTEREST RATE§ SUB (%) A-1 AAA (sf) 248.00 Three/six-month EURIBOR 38.00 plus 1.25% A-2 AAA (sf) 6.00 Three/six-month EURIBOR 36.50 plus 1.50% B-1 AA (sf) 30.00 Three/six-month EURIBOR 26.50 plus 1.85% B-2 AA (sf) 10.00 4.95% 26.50 C A (sf) 22.00 Three/six-month EURIBOR 21.00 plus 2.15% D BBB- (sf) 28.00 Three/six-month EURIBOR 14.00 plus 3.10% E BB- (sf) 19.00 Three/six-month EURIBOR 9.25 plus 6.00% F B- (sf) 11.00 Three/six-month EURIBOR 6.50 plus 8.38% Sub notes NR 36.10 N/A N/A *The ratings assigned to the class A-1, A-2, B-1, and B-2 notes address timely interest and ultimate principal payments. The ratings assigned to the class C, D, E, and F notes address ultimate interest and principal payments. §The payment frequency switches to semiannual and the index switches to six-month EURIBOR when a frequency switch event occurs. EURIBOR--Euro Interbank Offered Rate. NR--Not rated. N/A--Not applicable. BILBAO CLO I: Moody's Affirms B2 Rating on EUR12MM Class E Notes ---------------------------------------------------------------- Moody's Ratings has upgraded the ratings on the following notes issued by Bilbao CLO I Designated Activity Company: EUR27,000,000 Class B Senior Secured Deferrable Floating Rate Notes due 2031, Upgraded to Aa1 (sf); previously on Mar 12, 2024 Upgraded to Aa2 (sf) EUR21,000,000 Class C Senior Secured Deferrable Floating Rate Notes due 2031, Upgraded to A2 (sf); previously on Mar 12, 2024 Upgraded to A3 (sf) Moody's have also affirmed the ratings on the following notes: EUR206,000,000 (current outstanding amount EUR79,391,001.23) Class A-1A Senior Secured Floating Rate Notes due 2031, Affirmed Aaa (sf); previously on Mar 12, 2024 Affirmed Aaa (sf) EUR30,000,000 (current outstanding amount EUR11,561,796.30) Class A-1B Senior Secured Fixed Rate Notes due 2031, Affirmed Aaa (sf); previously on Mar 12, 2024 Affirmed Aaa (sf) EUR9,000,000 Class A-1C Senior Secured Floating Rate Notes due 2031, Affirmed Aaa (sf); previously on Mar 12, 2024 Affirmed Aaa (sf) EUR28,500,000 Class A-2A Senior Secured Floating Rate Notes due 2031, Affirmed Aaa (sf); previously on Mar 12, 2024 Upgraded to Aaa (sf) EUR10,000,000 Class A-2B Senior Secured Fixed Rate Notes due 2031, Affirmed Aaa (sf); previously on Mar 12, 2024 Upgraded to Aaa (sf) EUR28,500,000 Class D Senior Secured Deferrable Floating Rate Notes due 2031, Affirmed Ba2 (sf); previously on Mar 12, 2024 Affirmed Ba2 (sf) EUR12,000,000 Class E Senior Secured Deferrable Floating Rate Notes due 2031, Affirmed B2 (sf); previously on Mar 12, 2024 Affirmed B2 (sf) Bilbao CLO I Designated Activity Company, issued in June 2018, is a collateralised loan obligation (CLO) backed by a portfolio of mostly high-yield senior secured/mezzanine European loans. The portfolio is managed by Guggenheim Partners Europe Limited. The transaction's reinvestment period ended in September 2022. RATINGS RATIONALE The rating upgrades on the Class B and C notes are primarily a result of the deleveraging of the senior notes following amortisation of the underlying portfolio since the last rating action in March 2024. The affirmations on the ratings on the Class A-1A, A-1B, A-1C, A-2A, A-2B, D and E notes are primarily a result of the expected losses on the notes remaining consistent with their current rating levels, after taking into account the CLO's latest portfolio, its relevant structural features and its actual over-collateralisation ratios. The Class A-1A and A-1B notes have paid down by approximately EUR86 million (36.4% of original balance) since the last rating action in March 2024 and EUR145 million (61.4% of original balance) since closing. As a result of the deleveraging, over-collateralisation (OC) has increased across the capital structure. According to the trustee report dated August 2024 [1] the Class A, Class B, Class C, Class D and Class E OC ratios are reported at 182.25%, 152.50%, 135.33%, 117.39% and 111.18% compared to February 2024 [2] levels of 150.77%, 134.58%, 124.21%, 112.45% and 108.14%, respectively. The deleveraging and OC improvements primarily resulted from high prepayment rates of leveraged loans in the underlying portfolio. Most of the prepaid proceeds have been applied to amortise the liabilities. All else held equal, such deleveraging is generally a positive credit driver for the CLO's rated liabilities. The key model inputs Moody's use in Moody's analysis, such as par, weighted average rating factor, diversity score and the weighted average recovery rate, are based on Moody's published methodology and could differ from the trustee's reported numbers. In Moody's base case, Moody's used the following assumptions: Performing par and principal proceeds balance: EUR252.3 million Diversity Score: 33 Weighted Average Rating Factor (WARF): 3090 Weighted Average Life (WAL): 3.4 years Weighted Average Spread (WAS) (before accounting for Euribor floors): 3.61% Weighted Average Coupon (WAC): 4.14% Weighted Average Recovery Rate (WARR): 43.47% The default probability derives from the credit quality of the collateral pool and Moody's expectation of the remaining life of the collateral pool. The estimated average recovery rate on future defaults is based primarily on the seniority of the assets in the collateral pool. In each case, historical and market performance and a collateral manager's latitude to trade collateral are also relevant factors. Moody's incorporate these default and recovery characteristics of the collateral pool into Moody's cash flow model analysis, subjecting them to stresses as a function of the target rating of each CLO liability it is analysing. Methodology Underlying the Rating Action: The principal methodology used in these ratings was "Moody's Global Approach to Rating Collateralized Loan Obligations" published in May 2024. Counterparty Exposure: The rating action took into consideration the notes' exposure to relevant counterparties, such as account bank, using the methodology "Moody's Approach to Assessing Counterparty Risks in Structured Finance methodology" published in October 2023. Moody's concluded the ratings of the notes are not constrained by these risks. Factors that would lead to an upgrade or downgrade of the ratings: The rated notes' performance is subject to uncertainty. The notes' performance is sensitive to the performance of the underlying portfolio, which in turn depends on economic and credit conditions that may change. The collateral manager's investment decisions and management of the transaction will also affect the notes' performance. Additional uncertainty about performance is due to the following: -- Portfolio amortisation: The main source of uncertainty in this transaction is the pace of amortisation of the underlying portfolio, which can vary significantly depending on market conditions and have a significant impact on the notes' ratings. Amortisation could accelerate as a consequence of high loan prepayment levels or collateral sales by the collateral manager or be delayed by an increase in loan amend-and-extend restructurings. Fast amortisation would usually benefit the ratings of the notes beginning with the notes having the highest prepayment priority. In addition to the quantitative factors that Moody's explicitly modelled, qualitative factors are part of the rating committee's considerations. These qualitative factors include the structural protections in the transaction, its recent performance given the market environment, the legal environment, specific documentation features, the collateral manager's track record and the potential for selection bias in the portfolio. All information available to rating committees, including macroeconomic forecasts, input from Moody's other analytical groups, market factors, and judgments regarding the nature and severity of credit stress on the transactions, can influence the final rating decision. JAZZ INVESTMENTS I: Fitch Puts 'BB' Rating to Sr. Unsecured Notes ----------------------------------------------------------------- Fitch Ratings has assigned a 'BB'/'RR4' senior unsecured debt rating to Jazz Investments I Limited's offering of exchangeable senior notes due 2030. The notes will be fully and unconditionally guaranteed, on a senior unsecured basis by the company's parent, Jazz Pharmaceuticals Public Company Limited (Jazz, Long-Term Issuer Default Rating [IDR] BB). Fitch expects a portion of the net proceeds of the offering will be used to repay up to $350 million of Jazz's term loans and, if the initial purchasers of the notes exercise their option to purchase additional notes, Fitch expects Jazz to use the additional proceeds for further prepayments of the term loans. Key Rating Drivers Innovative Biopharmaceutical Company: Jazz's multi-year history of launching innovative products in the fields of neuroscience and oncology positions it for solid growth and profitability. Fitch believes Jazz's commercial success is the result of effective R&D capabilities that should continue over the near to medium term with its pipeline investments in neuroscience and oncology. Jazz has demonstrated a disciplined and effective approach to capital allocation that is enabling such growth while reducing its financial leverage. Diversification and Pipeline Opportunities: Jazz is exhibiting a growing base of diversified product revenues; revenues from three portfolios, including "sleep", Epidiolex and oncology continue to show solid growth. In addition, Jazz is making significant progress within its pipeline as evidenced by the number and breadth of near-term catalysts. Fitch has not factored any revenues from Jazz's pipeline into its forecast, but believes the opportunities from the pipeline bode well for continued internal sources of growth. Moreover, in light of its organic growth, Jazz is less dependent on executing a very large debt-financed transaction to reach its Vision 2025 revenue target of $5.0 billion. Effective Deleveraging: Fitch's estimate of Jazz's EBITDA leverage as of YE 2023 and for TTM period ended June 30, 2024 is approximately 3.5 to 3.6x, which compares with its recent peak in 2021 after the GW Pharmaceuticals acquisition of 4.7x. Jazz's EBITDA leverage has fluctuated because of the use of debt to finance acquisitions or investments in IPR&D that are charged to earnings. Pro forma for the offering of new notes, Fitch would expect EBITDA leverage to remain approximately the same. Jazz's financial flexibility has improved materially since the GW Pharmaceuticals acquisition as a result of the aforementioned trends of growth and diversification of revenues and its payment of debt. Those drivers provide greater debt capacity for Jazz to absorb the effects of debt-funded corporate development activities accompanied by Fitch's expectation of Jazz's commitment to reduce debt to levels consistent with the 'BB' rating sensitivities. Oxybate and Epidiolex Competition: Fitch anticipates that Xyrem and Xywav, as well as Epidiolex, will face increased competition over the near to medium term. However, Fitch also factors into its forecast meaningful royalty revenue from authorized generics of sodium oxybate. In addition, non-oxybate products intended for the treatment of excessive daytime sleepiness or cataplexy in narcolepsy, including new market entrants, even if not directly competitive with Xyrem or Xywav, could have the effect of changing treatment regimens and payor or formulary coverage of Xyrem or Xywav in favor of other products. Hence, Fitch's forecast for the oxybate products assumes a decline of almost 10% in 2024 with an offset from authorized generics that generates an overall flat revenue growth trend for 2024 and a return to growth in 2025. Litigation Profile: Jazz is involved in a wide range of legal proceedings that deal with Xyrem antitrust matters, the GW Pharmaceuticals acquisition, patent litigation, price fixing, and regulatory actions. Such litigation is costly and is expected to both increase and persist. It is unclear when or how any litigation matters will be resolved and, therefore, Fitch has factored material litigation expenses into its forecast by assuming a lower adjusted operating margin (and therefore, EBITDA margin) compared with Jazz's published guidance. However, Fitch has not factored any adverse settlements into its forecast of EBITDA or cash flows, but instead is treating the potential for a material adverse outcome as event risk. Derivation Summary Jazz's 'BB' IDR reflects its leadership position in the sale and development of products to address sleep and movement disorders and its growing business in oncology, including hematologic malignancies and solid tumors. In addition, the rating reflects Jazz's significant cash flow generation and its expanding pipeline of therapeutics. The combination with GW Pharmaceuticals added additional leadership in the sale of products to address epilepsy, increased Jazz's scale, and diversified its revenue and cash flow sources. Those strengths are primarily offset by competitive challenges to the oxybate franchise, its leveraged growth strategy, and litigation exposures. Jazz's credit profile compares favorably with other biopharmaceutical companies with comparable revenue. It has greater revenue diversification and significantly fewer litigation claims and lower expenses compared with other pharmaceutical companies that were forced into restructurings/bankruptcies because of excessive litigation. In addition, Jazz has lower financial leverage and more growth momentum compared with Teva Pharmaceutical Industries Limited (BB-/Positive). Parent-Subsidiary Relationship: The IDRs are rated on a consolidated basis per Fitch's Parent and Subsidiary Linkage Rating Criteria using the weak parent/strong subsidiary approach, with open access and control factors based on the intercompany guarantees of secured debt and the entities operating as a single enterprise with strong legal and operational ties. Corporate Recovery Ratings and Instrument Ratings Criteria: Fitch's Recovery Ratings (RR) for issuers rated 'BB+' to 'BB-' are based on generic recovery assumptions. Fitch has treated Jazz's senior secured debt as Category 1 first lien despite many of the borrowers being outside the United States because of its belief that the majority of the collateral value is in the United States given its revenue generation and therefore has notched up such debt to 'BBB-', which is two notches above the Long-Term IDR. The secured debt receives a RR of 'RR1', which implies a recovery in the range of 91%-100%. Also, in accordance with the criteria, ratings for the senior unsecured debt are capped at the IDR of 'BB' with a RR of 'RR4', which implies a recovery in the 31%-50% range. Hybrid Instruments: Fitch treats Jazz's exchangeable notes as 100% debt in its ratio calculations. According to Fitch's Corporate Hybrids Treatment and Notching Criteria, optional convertibles (whether the option is with the issuer, instrument holder or both) will be treated as debt in all cases, unless the instrument has other features as described in the criteria report that are conducive to equity credit. This is not the case for the two exchangeable notes because they have stated maturities and require interest payments with no deferral features. Key Assumptions - Organic revenue growth rate of approximately 4%-5% over the 2024-2027 forecast period and total growth of 8%, inclusive of assumed acquisitions; organic growth driven primarily from increased sales of Epidiolex, Xywav, Rylaze and Authorized Generics; - Adjusted gross margins greater than 90% and adjusted EBITDA margins of approximately 40% over the forecast; - Non-GAAP effective tax rate of approximately 15%-20%; - Effective interest expense increases with the rise in SOFR and ranges from 5%-6% over the forecast; - Change in net working capital as a % of revenue ranges from 2.4%-4% over the forecast; - Capex is approximately 1.0% to 1.5% of revenue over the forecast; - A large acquisition is factored into the forecast in 2024 that helps Jazz reach its Vision 2025 revenue target; gross EBITDA leverage peaks at approximately 4.1x, but returns to below 4.0x within 12 months-24 months with the payment of debt; - No common dividends are assumed; - Share repurchases of $300 million to $600 million over the forecast period. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - Organic revenue growth from existing products of 4% to 5% over the forecast period; - Total EBITDA leverage sustained below 3.5x and CFO - capex/total debt with equity credit greater than 10%. Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - Loss of oxybate revenue without offsetting growth in other products; - A large debt-funded transaction or significant investments in IPR&D that cause total EBITDA leverage to be sustained above 4.5x and CFO - capex/total debt with equity credit to be less than 5%. Liquidity and Debt Structure Good, Steady Source of Liquidity: Jazz is expected to possess good liquidity to support its operating activities, capex, product acquisitions and in-licensing activities and debt service. Jazz's primary sources of liquidity are expected to be CFO (assumed to be at least $1.0 billion) and a $500 million revolving credit facility. Absent material investment in new products or in-licensing, business combinations, or share repurchases, cash balances would be expected to build materially. The effective interest rate is expected to remain high as a result of the increase in Secured Overnight Financing Rate (SOFR) and is assumed to range between 5%-6%, depending on assumed debt levels. Manageable Long-Term Debt: Jazz has a modest level of required principal payments compared with forecast FCF for the remainder of fiscal years 2024 and fiscal 2025. As a result, Fitch believes Jazz will have significant flexibility to continue to pay down its term loan B rapidly if it chooses to do so. Fitch's EBITDA leverage ratio would decline significantly because of forecasted growth in EBITDA even without material debt repayment; any material new IPR&D investments or leveraged acquisitions would reverse that path. Issuer Profile Jazz Pharmaceuticals Public Limited Company is a global biopharmaceutical company that develops medicines for people with serious diseases, often with limited or no therapeutic options. The company has a diverse portfolio of marketed medicines and novel product candidates, from early- to late-stage development, primarily in neuroscience and oncology. Summary of Financial Adjustments Fitch adjusted EBITDA to add back stock-based compensation, transaction and integration related expenses, and acquisition accounting inventory fair value step-up, and to charge EBITDA with finance lease costs. ESG CONSIDERATIONS Jazz Pharmaceuticals Public Limited Company has an ESG Relevance Score of '4' for Exposure to Social Impacts due to pressure to contain healthcare spending, a highly sensitive political environment, and social pressure to contain costs or restrict pricing, which has a negative impact on the credit profile, and is relevant to the rating in conjunction with other factors. The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Date of Relevant Committee 27 March 2024 MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS Fitch's latest quarterly Global Corporates Macro and Sector Forecasts data file which aggregates key data points used in its credit analysis. Fitch's macroeconomic forecasts, commodity price assumptions, default rate forecasts, sector key performance indicators and sector-level forecasts are among the data items included. Entity/Debt Rating Recovery ----------- ------ -------- Jazz Investments I Ltd. senior unsecured LT BB New Rating RR4 =================== K A Z A K H S T A N =================== KAZAKH HOUSEBUILDER: Fitch Assigns BB LongTerm IDR, Outlook Stable ------------------------------------------------------------------ Fitch Ratings has assigned Kazakh Housebuilder Private Company BI Development Ltd. (BI Development) a Long-Term Issuer Default Rating (IDR) of 'BB' with Stable Outlook. The rating reflects BI Development's leading market position in the growing Kazakh market and the group's low leverage. Fitch expects BI Development's residential-for-sale developments to be supported by strong housing demand in Kazakhstan (BBB/Stable). The Stable Outlook reflects its expectation that BI development will continue to operate with a conservative development appetite and internal-risk management policy that limits the risk of accumulating excess inventory. Fitch also expects BI Development to maintain its conservative financial profile. Key Rating Drivers Regional Residential Developer: BI Development specialises in building and selling modern apartments in Kazakhstan's largest conurbations. They range from standard flats to premium apartments, each with a different price point. The apartments are usually part of condos in mid-rise towers, averaging 150 units. Kazakhstan's growing population and urbanisation are the main drivers supporting demand for new homes, but the start of a new residential development is often speculative as the presale of properties is not a common practice in the country, nor is it required by financial institutions to grant development financing. Established Master Developer: BI Development benefits from a strong reputation in Kazakhstan, due to its role as one of the key developers in the region. It is responsible for the comprehensive planning, development, and management of large-scale real estate projects or communities. This role typically involves overseeing the entire development from initial concept through to completion, including land acquisition, zoning, and infrastructure development. The large developments (or "Bigville") comprise schools, offices, other public facilities and amenities, and cater to the needs of local municipalities that support the requalification of specific areas in towns where BI Development operates. Since 2022, BI Development has been expanding its presence abroad in Uzbekistan. Vast Owned Landbank: At end-2023, BI Development owned a vast landbank, equivalent to nearly 10 years of development in Astana and five years in Almaty, based on current development activity. Its existing portfolio of land reduces the group's working-capital needs over the next four years. This availability of land also supports the group's plan to consistently generate over KZT520 million (EUR1 billion) of annual revenue in the next four years, thereby building scale and increasing project diversification. Effective Risk Management: BI Development has a stringent internal risk management policy in place and a strong record in implementing complex projects. Large projects are managed in a phased approach to minimise associated risks. The group does not have a presale target policy but instead phases developments so that units under construction are mostly sold before initiating new work on the same or nearby sites. The group typically commits to an adjacent site only when a minimum 50% of an ongoing development is sold or up to 70% for its high-end residential schemes. Buoyant Housing Demand: Demand for flats in Kazakhstan is high and is driven by ongoing population growth in the country. In 2023, the construction of housing units in Kazakhstan rose 11.9% year-over-year, led by Astana (up 58.1%) and Almaty (up 30.7%). Fitch expects buoyant demand for new homes to continue in the next four years in the current macroeconomic environment. Positively, the Kazakh government supports the mortgage and homebuilding markets through various mechanisms, notably with lower interest rates than the central bank's base rate. Minimal Leverage: Between 2020 and 2023, BI Development's debt/EBITDA was low, ranging from 2.4x in the pandemic-affected 2021 to 0.4x at 2023. Fitch forecasts EBITDA leverage to remain below 1.0x over the next four years and Fitch expects BI Development to retain a net cash position. EBITDA net interest coverage is ample (end-2023: 24.3x) and it is anticipated to remain firmly in double digits, provided there is no large new debt issuance from the group. Governance Constrained: As a private company, BI Development has a less robust governance framework and less transparent financial reporting than rated peers. This includes limited independence of its board, infrequent and partial financial disclosure and related-party transactions in the wider group. These factors are a constraint on its rating. Derivation Summary BI Development's business profile compares well with that of Spanish-based Via Celere Desarrollos Inmobiliarios, S.A.U. (BB- /Stable) and AEDAS Homes, S.A. (BB-/Stable). These companies offer mid-to-high-value dwellings in large multi-family, multi-storey condominiums in the prominent cities of their respective countries. UK-based peers Miller Homes Group (Finco) PLC (Miller Homes, B+/Stable) and Maison Bidco Limited (Keepmoat; BB-/Stable) focus instead on single-family homes in selected regions of the UK, away from its capital city, London. Common among all these companies is a product offering catering to local demand for new homes, while the Dubai-based Binghatti Holding Ltd (B+/Positive), traditionally focused on the mid-market, is now expanding into the luxury-end of the market, attracting high net worth individuals and investors alike. Emaar Properties PJSC (BBB/Stable) and BI Development operate as master builders locally and internationally, with a focus on large community projects, which means they operate different business models to EMEA homebuilder peers. The pre-sale target is an important factor that Fitch considers when it assesses the business profile of homebuilders, although it is often a feature of the market rather than a company-specific trait. Fitch believes Kazakhstan has no requirements to set pre-sale thresholds ahead of construction. In France, Kaufman & Broad S.A. (BBB-/Stable) sets an internal pre-sale target of 60% before buying land and starting construction, thus benefitting its working-capital profile. The pre-sale threshold of Via Celere and AEDAS Homes is slightly lower at 30%-50%, which Spanish financial institutions usually require before granting developers bespoke financing for each new development. The leverage profile of BI Development, which is expected to be net cash, shares common characteristics with the highest Fitch-rated homebuilders across EMEA like Kaufman & Broad and The Berkeley Group Holdings plc (BBB-/Stable). These companies have reported net cash for many years, building a solid and credible record. Key Assumptions - Revenue growth in single digits in 2024 and low teens in 2025-2027 - Sustainable EBITDA margin at around 15.0%-15.2% during 2024-2027 - Higher working-capital outflow in 2024 due to inventories build-up, followed by normalised working- capital requirements in 2025-2027 - Capex at about 0.2% of revenue to 2027 - Dividends payments of about KZT34 billion in 2024, KZT39 billion in 2025, KZT50 billion in 2026 and KZT64 billion in 2027 - No M&As to 2027 RATING SENSITIVITIES Factors That Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - Improved corporate governance and transparency - Further growth in size and diversification leading to the revenue generation of over EUR1.5 billion - Consistently positive FCF margins of over 3% - EBITDA gross leverage below 1.0x on sustained basis Factors That Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - EBITDA interest coverage below 5x - EBITDA gross leverage above 2.0x on sustained basis - Deterioration of the credit profile of BI Development's parent company, Private Company BI Group Ltd, which may result in extraction of funds from the subsidiary - Shareholder-friendly policy leading to a deterioration of the financial profile Liquidity and Debt Structure Healthy Liquidity: At end-2023 BI Development's Fitch-defined readily available cash amounted to KZT118 billion, which was sufficient to cover short-term repayments of about KZT15 billion in the next 12 months. Expected positive FCF generation will further support the group's liquidity position. BI Development also has an access to revolving credit facilities provided by local banks. These facilities are uncommitted, which is common for the Kazakhstani market. Fitch does not include uncommitted or short-term facilities in its liquidity score of BI Development. Date of Relevant Committee 13 August 2024 MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS Fitch's latest quarterly Global Corporates Macro and Sector Forecasts data file which aggregates key data points used in its credit analysis. Fitch's macroeconomic forecasts, commodity price assumptions, default rate forecasts, sector key performance indicators and sector-level forecasts are among the data items included. ESG Considerations BI Development has an ESG Relevance Score of '4' for Governance Structure due to ownership concentration, which has a negative impact on the credit profile, and is relevant to the ratings in conjunction with other factors. The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating ----------- ------ Private Company BI Development Ltd. LT IDR BB New Rating ========= S P A I N ========= RURAL HIPOTECARIO VIII: Moody's Ups EUR7.2MM D Notes Rating to Ba1 ------------------------------------------------------------------ Moody's Ratings has upgraded the ratings of eight notes in FONDO DE TITULIZACION RMBS Prado VII (Prado VII), IM CAJAMAR 5, FTA (Cajamar 5) and RURAL HIPOTECARIO VIII, FTA (Rural VIII). The rating action reflects better than expected collateral performance for Prado VII and the increased levels of credit enhancement for all the affected notes. Moody's affirmed the ratings of the notes that had sufficient credit enhancement and an expected tranche loss commensurate with the current ratings. Issuer: FONDO DE TITULIZACION RMBS Prado VII EUR442.9M Class A Notes, Upgraded to Aa1 (sf); previously on Nov 12, 2020 Definitive Rating Assigned Aa2 (sf) EUR38.6M Class B Notes, Upgraded to Baa1 (sf); previously on Nov 12, 2020 Definitive Rating Assigned Baa3 (sf) Issuer: IM CAJAMAR 5, FTA EUR962M Class A Notes, Affirmed Aa1 (sf); previously on Oct 26, 2023 Affirmed Aa1 (sf) EUR11.5M Class B Notes, Upgraded to A1 (sf); previously on Oct 26, 2023 Upgraded to A2 (sf) EUR12M Class C Notes, Upgraded to A3 (sf); previously on Oct 26, 2023 Upgraded to Baa2 (sf) EUR14.5M Class D Notes, Upgraded to Baa3 (sf); previously on Oct 26, 2023 Affirmed Ba3 (sf) EUR15M Class E Notes, Affirmed C (sf); previously on Sep 14, 2007 Definitive Rating Assigned C (sf) Issuer: RURAL HIPOTECARIO VIII, FTA EUR802.4M Class A2a Notes, Affirmed Aa1 (sf); previously on Apr 14, 2023 Affirmed Aa1 (sf) EUR350M Class A2b Notes, Affirmed Aa1 (sf); previously on Apr 14, 2023 Affirmed Aa1 (sf) EUR27.3M Class B Notes, Upgraded to A1 (sf); previously on Apr 14, 2023 Affirmed Baa1 (sf) EUR15.6M Class C Notes, Upgraded to Baa2 (sf); previously on Apr 14, 2023 Upgraded to Ba1 (sf) EUR7.2M Class D Notes, Upgraded to Ba1 (sf); previously on Apr 14, 2023 Upgraded to B1 (sf) EUR11.7M Class E Notes, Affirmed Ca (sf); previously on Sep 18, 2014 Affirmed Ca (sf) Maximum achievable rating is Aa1 (sf) for structured finance transactions in Spain, driven by the corresponding local currency country ceiling of the country. RATINGS RATIONALE The rating action is prompted by an increase in credit enhancement for the affected tranches and, for Prado VII, decreased key collateral assumptions, namely the portfolio Expected Loss (EL) and MILAN Stressed Loss assumptions due to better than expected collateral performance. Revision of Key Collateral Assumptions As part of the rating action, Moody's reassessed Moody's lifetime loss expectation for the portfolio reflecting the collateral performance to date. The performance of Prado VII has continued to improve since last year. Delinquencies have continued to be stable in the past year, with 90 days plus arrears currently standing at 0.25% of current pool balance. Cumulative defaults currently stand at 0.08% of original pool balance slightly up from 0.00% a year earlier. Moody's decreased the expected loss assumption to 3.43% as a percentage of current pool balance from 5.63% due to the improved performance. The revised expected loss assumption corresponds to 2.25% as a percentage of original pool balance. For Cajamar 5 and Rural VIII, the performance has continued to be stable. Delinquencies have continued to be stable in the past year, with 90 days arrears currently standing at 0.31% and 1.06% of current pool balance respectively. Moody's have maintained the expected loss assumption as a percentage of current pool balance. The expected loss assumption as a percentage of original pool balance corresponds to 2.29% and 0.91%, respectively. Moody's have also assessed loan-by-loan information as a part of Moody's detailed transaction review to determine the credit support consistent with target rating levels and the volatility of future losses. As a result, Moody's have decreased the MILAN Stressed Loss assumption for Prado VII to 10.60%. Moody's have maintained the MILAN Stressed Loss assumption for Cajamar 5 and Rural VIII at 6.10% and 7.20%, respectively. Increase in Available Credit Enhancement For Prado VII sequential amortization of the notes led to an increase of available credit enhancement for the Class A and B Notes. For instance, the credit enhancement for the Class A Notes has increased to 23.81% from 16.00% since closing. For Prado VII, Moody's note the risk of interest deferrals on Class B upon a cumulative default trigger being breached. After the step-up period in September 2025 all cash available after reserve fund replenishment will be used to redeem the Class A notes according to the priority of payments on the notes. If the cumulative default trigger for Class B is breached, no cash would be available to pay the interest on Class B. This event is only anticipated to occur in high default scenarios. For Cajamar 5, a non-amortizing reserve fund led to the increase in the credit enhancement available in this transaction. For instance, the credit enhancement for the Class D Notes has increased to 5.59% from 4.93% since the last rating action. As of now, Classes A, B, C and D are amortizing pro-rata. When the pool factor falls below 10%, from the current level of 13.2%, the notes will amortize sequentially. This will accelerate the increase in credit enhancement for Classes A, B and C. For Rural VIII sequential amortization and a non-amortizing reserve fund led to the increase in the credit enhancement available in this transaction. For instance, the credit enhancement for Class B has increased to 10.48% from 7.81% since the last rating action. The principal methodology used in these ratings was "Residential Mortgage-Backed Securitizations" published in May 2024. The analysis undertaken by Moody's at the initial assignment of ratings for RMBS securities may focus on aspects that become less relevant or typically remain unchanged during the surveillance stage. Factors that would lead to an upgrade or downgrade of the ratings: Factors or circumstances that could lead to an upgrade of the ratings include (1) performance of the underlying collateral that is better than Moody's expected, (2) an increase in available credit enhancement and (3) improvements in the credit quality of the transaction counterparties and (4) a decrease in sovereign risk. Factors or circumstances that could lead to a downgrade of the ratings include (1) an increase in sovereign risk, (2) performance of the underlying collateral that is worse than Moody's expected, (3) deterioration in the notes' available credit enhancement and (4) deterioration in the credit quality of the transaction counterparties. =========== T U R K E Y =========== TURK EKONOMI: Fitch Publishes 'CCC(EXP)' Rating for Add'l AT1 Notes ------------------------------------------------------------------- Fitch Ratings has published Turk Ekonomi Bankasi A.S.'s (TEB; B/Positive/b) planned additional Tier 1 (AT1) capital notes expected rating of 'CCC(EXP)'. The size of the issue is not yet determined but is expected to be in the range of USD200 million - USD300 million. The final rating is subject to the receipt of the final documentation conforming to information already received by Fitch. Key Rating Drivers The planned AT1 notes are rated three notches below TEB's Viability rating (VR) of 'b'. The notching comprises two notches for loss severity given the notes' deep subordination, and one notch for incremental non-performance risk given their full discretionary, non-cumulative coupons. Fitch has used the bank's VR as anchor rating as Fitch deems it the most appropriate measure of non-performance risk. In accordance with the Bank Rating Criteria, Fitch has applied three notches from TEB's VR, instead of the baseline four notches, due to rating compression, as TEB's VR is below the 'BB-' threshold. The notes are Basel III-compliant, perpetual, deeply subordinated, fixed-rate resettable AT1 debt securities. They have fully discretionary, non-cumulative coupons and are subject to full or partial principal write-down if TEB's common equity Tier 1 (CET1) on a bank-only or group-basis ratio falls below 5.125%. They have a call option (subject to approval by the Banking Regulation and Supervision Agency (BRSA)) after five years and any interest payment date thereafter. The notes are also subject to permanent partial or full write-down, on the occurrence of a non-viability event (NVE). An NVE is when a bank incurs a loss (on a consolidated or non-consolidated basis) and the bank becomes, or it is probable that the bank will become, non-viable as determined by the local regulator, the BRSA. The bank will be deemed non-viable should it reach the point at which the BRSA determines its operating license is to be revoked and the bank liquidated, or the rights of the bank's shareholders (except to dividends), and the management and supervision of the bank, are transferred to the Savings Deposit Insurance Fund on the condition that losses are deducted from the capital of existing shareholders. TEB's consolidated regulatory CET1 and Tier 1 ratios (including regulatory forbearance of fixing of exchange rate and cancellation of M-t-M losses) were both at 9.3%, at end-1H24, above its regulatory minimum requirements of 7.0% and 8.5%, respectively, including a capital conservation buffer of 2.5%. Fitch estimates that potential AT1 issuance will increase the Tier-1 ratio by about 150bp to 230bp depending on the size. Rating Sensitivities Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade As the notes are notched down from TEB's VR, the rating is sensitive to a downgrade of the VR. This may result, for example, from a significant decline in capital buffers relative to regulatory requirements. The notes' rating is also sensitive to an unfavourable revision in Fitch's assessment of incremental non-performance risk. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade The notes' rating is sensitive to an upgrade of TEB's VR but the notching of the notes' rating could be widened to four should TEB's VR be upgraded to the 'bb-' threshold. Date of Relevant Committee 13 August 2024 Public Ratings with Credit Linkage to other ratings TEB's ratings are linked to BNPP's. ESG CONSIDERATIONS The ESG Relevance Score for Management Strategy of '4' reflects an increased regulatory burden on all Turkish banks. Management ability across the sector to determine their own strategy and price risk is constrained by increased regulatory interventions and also by the operational challenges of implementing regulations at the bank level. This has a moderately negative impact on the bank's credit profile and is relevant to the rating in combination with other factors. The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating ----------- ------ Turk Ekonomi Bankasi A.S. Subordinated LT CCC(EXP) Publish =========================== U N I T E D K I N G D O M =========================== ABILITY RECRUITMENT: MHA Named as Administrators ------------------------------------------------ Ability Recruitment Solutions Limited was placed into administration proceedings in the High Court of Justice, Court No: CR-2024-005051, and James Alexander Snowdon and Liam Alexander Short of MHA were appointed as administrators on Aug. 28, 2024. Ability Recruitment is a temporary employment agency. Its registered office is at Office 21 Phoenix House, Hyssop Close, Cannock, WS11 7GA. The administrators can be reached at: James Alexander Snowdon Liam Alexander Short MHA, 6th Floor 2 London Wall Place London, EC2Y 5AU For further details, contact: Clara Groves E-mail: Clara.Groves@mha.co.uk AQUALUX PRODUCTS: FRP Advisory Named as Administrators ------------------------------------------------------ Aqualux Products Limited was placed into administration proceedings in the Birmingham County Court, Court Number: CR-2024-005040, and Rajnesh Mittal and Benjamin Neil Jones of FRP Advisory Trading Limited were appointed as administrators on Aug. 29, 2024. Aqualux Products is a bathroom product manufacturer. Its registered office is at Canton House, Wheatfield Way, Hinckley, LE10 1YG, to be changed to C/o FRP Advisory Trading Limited, 2nd Floor, 120 Colmore Row, Birmingham, B3 3BD. Its principal trading address is at Canton House, Wheatfield Way, Hinckley, LE10 1YG The administrators can be reached at: Rajnesh Mittal Benjamin Neil Jones FRP Advisory Trading Limited 2nd Floor, 120 Colmore Row Birmingham, B3 3BD For further details, contact: The Joint Administrators Tel No: 0121 710 1680 Alternative contact: Ethan Yates E-mail: cp.birmingham@frpadvisory.com BEIGE PLUS: R2 Advisory to Lead Administration Proceedings ---------------------------------------------------------- Beige Plus Limited was placed into administration proceedings in the High Court of Justice, Court Number: CR-2024-004996, and Robert Horton of R2 Advisory Limited was appointed as administrator on Aug. 23, 2024. Beige Plus specializes in the retail sale of clothing. Its registered office is at C/o R2 Advisory Limited, St Clement's House, 27 Clements Lane, London, EC4N 7AE. Its principal trading address is at 44 New Cavendish Street, London, W1G 8TR. The administrator can be reached at: Robert Horton R2 Advisory Limited St Clement's House 27 Clements Lane London, EC4N 7AE For further details, contact: Robert Horton E-mail: enquiries@r2a.uk.com Tel No: 020 7043 4190 Alternative contact: Fionnula Sheehan DANTECH UK: Begbies Traynor Named as Administrators --------------------------------------------------- Dantech UK Limited was placed into administration proceedings in the High Court of Justice, Business and Property Courts in Manchester, Insolvency and Companies List (ChD), Court Number: CR-2024-MAN-001068, and Stephen Berry and Jason Dean Greenhalgh of Begbies Traynor (Central) LLP were appointed as administrators on Aug. 27, 2024. Dantech UK designs & builds food processing equipment. Its registered office is at Merlin Park Ringtail Road, Burscough Industrial Estate, Ormskirk, Lancashire, L40 8JY. The administrators can be reached at: Stephen Berry Jason Dean Greenhalgh Begbies Traynor (Central) LLP No 1 Old Hall Street, Liverpool L3 9HF For further information, contact: Aiden Fallon Begbies Traynor (Central) LLP Tel No: 0151 227 4010 E-mail: aiden.fallon@btguk.com FILETURN LIMITED: Quantuma Advisory Named as Administrators ----------------------------------------------------------- Fileturn Limited was placed into administration proceedings in the Business and Property Courts in England and Wales, Court Number: CR-2024-004885, and Frank Wessely and Jo Leach of Quantuma Advisory Limited were appointed as administrators on Aug. 28, 2024. Fileturn Limited, f/k/a Fileturn Holdings Limited, provides support services. Its registered office is at Fileturn House, Brighton Road, Redhill, RH1 6QZ. Its principal trading address is at Fileturn House, Brighton Road, Redhill, RH1 6QZ. The administrators can be reached at: Frank Wessely Jo Leach Quantuma Advisory Limited 2nd Floor, Arcadia House 15 Forlease Road, Maidenhead SL6 1RX For further details, contact: Jasdeep Koundu E-mail: Jasdeep.Koundu@quantuma.com Tel No: 01628 478100 LISARB ENERGY: Taps Begbies and MacIntyre Hudson as Administrators ------------------------------------------------------------------ Lisarb Energy Group Limited was placed into administration proceedings in the High Court of Justice, Court Number: CR-2024-005037, and Allan Kelly and Steven Philip Ross of FRP Advisory Trading Limited, and Michael Sanders of MacIntyre Hudson LLP were appointed as administrators on Aug. 27, 2024. Lisarb Energy is a holding company. Its registered office is at Median House, Fishleigh Court, Fishleigh Road, Barnstaple, EX31 3UD, to be changed to Suite 5, 2nd Floor Bulman House, Regent Centre, Gosforth, Newcastle Upon Tyne, NE3 3LS. Its principal trading address is at Median House, Fishleigh Court, Fishleigh Road, Barnstaple, EX31 3UD. The administrators can be reached at: Allan Kelly Steven Philip Ross FRP Advisory Trading Limited Suite 5, 2nd Floor, Bulman House Regent Centre Newcastle Upon Tyne NE3 3LS -- and -- Michael Sanders MacIntyre Hudson LLP 6th Floor, 2 London Wall Place London, EC2Y 5AU For further details, contact: The Joint Administrators Tel No: 0191 605 3737 Alternative contact: Georgia Foster E-mail: cp.newcastle@frpadvisory.com M PRICE GROUP: Seneca IP to Lead Administration Proceedings ----------------------------------------------------------- M Price Group Limited was placed into administration proceedings in the High Court of Justice Business and Property Court in Leeds, No CR-2024-LDS-000848, and John Hedger of Seneca IP Ltd was appointed as administrator on Aug. 28, 2024. M Price is a construction holding company. Its registered office address is 5th Floor, 167-169 Great Portland Street, London, W1W 5PF. The administrator can be reached at: John Hedger Seneca IP Ltd Speedwell Mill, Old Coach Road Tansley, Matlock, DE4 5FY For further details, contact: Ben Leaney E-mail: Ben.Leaney@seneca-ip.co.uk Tel No: 01629 761700 ROCKBYSEA SCOTLAND: FRP Advisory Named as Administrators -------------------------------------------------------- Rockbysea Scotland Limited was placed into administration proceedings in the Edinburgh Sheriff Court, and Callum Angus Carmichael, Chad Griffin, and Thomas Campbell Maclennan of FRP Advisory Trading Limited were appointed as administrators on Aug. 23, 2024. Rockbysea Scotland is a holding company for wind turbine businesses. Its registered office is at 5 Atholl Crescent, Edinburgh, EH3 8EJ to be changed to c/o FRP Advisory Trading Limited, Apex 3, 95 Haymarket Terrace, Edinburgh, EH12 5HD. The administrators can be reached at: Callum Angus Carmichael Chad Griffin Thomas Campbell Maclennan FRP Advisory Trading Limited Apex 3, 95 Haymarket Terrace Edinburgh, EH12 5HD For further details, contact: The Joint Administrators Tel No: 0330 055 5455 Alternative contact: Niamh Fraser E-mail: cp.edinburgh@frpadvisory.com SVL HEALTHCARE: Kroll Advisory Named as Administrators ------------------------------------------------------ SVL Healthcare Services Ltd was placed into administration proceedings in the High Court of Justice, Business and Property Courts of England and Wales, Insolvency and Companies List (ChD), and Benjamin John Wiles and Philip Joseph Dalkin of Kroll Advisory Ltd were appointed as administrators on Aug. 30, 2024. SVL Healthcare, f/k/a Savoy Ventures Limited, offers passenger land transport and freight transport by road. Its registered office is at 117 Dartford Road, Dartford, England, DA1 3EN. Its principal trading address is at Stone Castle, Stone Castle Drive, Greenhithe, DA9 9XL. The administrators can be reached at: Benjamin John Wiles Philip Joseph Dalkin Kroll Advisory Ltd The Shard, 32 London Bridge Street London, SE1 9SG For further details, contact: Judah Jackson E-mail: svl.healthcare@kroll.com Tel No: +44 (0) 20 7029 5063 ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter-Europe is a daily newsletter co- published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA. Marites O. Claro, Rousel Elaine T. Fernandez, Joy A. Agravante, Julie Anne L. Toledo, Ivy B. Magdadaro, and Peter A. Chapman, Editors. Copyright 2024. All rights reserved. ISSN 1529-2754. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Europe subscription rate is US$775 per half-year, delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are US$25 each. For subscription information, contact Peter Chapman at 215-945-7000. * * * End of Transmission * * *